THE SENATE                           S.C.R. NO.            43
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
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                    SENATE  CONCURRENT
                        RESOLUTION

  REQUESTING A STUDY ON THE ISSUES AND IMPLICATIONS OF
    INSTITUTING A TAX ON ELECTRONIC COMMERCE.



 1        WHEREAS, the recent advent of the Internet is radically
 2   changing the way people work, communicate, and conduct daily
 3   commercial transactions; and
 4   
 5        WHEREAS, this rapid transition to a digital economy
 6   seriously threatens the tax base that supports basic, vital
 7   public services in our State and communities; and
 8   
 9        WHEREAS, many large businesses are frustrated with the
10   complexity and inefficiency of sales tax jurisdictions across
11   the country, while certain local businesses, under the Internet
12   Tax Freedom Act, are now carrying a disproportionate tax
13   burden; and
14   
15        WHEREAS, in 1998, Congress passed and President Clinton
16   signed the Internet Tax Freedom Act to place a three-year
17   moratorium on electronic commerce by state and local
18   governments; and
19   
20        WHEREAS, the Advisory Commission on Electronic Commerce,
21   created by the Act, was charged with submitting a report with
22   policy and legislative recommendations on electronic commerce
23   taxation this year; and
24   
25        WHEREAS, given the significance of sales and use taxes in
26   their jurisdictions, representatives of state and local
27   government organizations have actively campaigned to preserve
28   their rights and to determine whether or not to tax electronic
29   commerce; and
30   
31        WHEREAS, vital state and local government services to
32   citizens are at risk if tax-free electronic commerce continues
33   and further erodes the tax base; and
34   
35        WHEREAS, state and local policy-makers need to understand
36   the administrative burdens, ranging from registration to

 
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 1   collecting taxes, imposed on remote sellers by more than 7,000
 2   sales and use tax jurisdictions; and
 3   
 4        WHEREAS, state and local governments should provide
 5   meaningful solutions to such administrative problems by
 6   adopting sales and use tax reforms before Congress places a
 7   permanent ban on electronic commerce taxation by state and
 8   local governments; and
 9   
10        WHEREAS, before the moratorium became effective, several
11   states were in the process of formulating Internet taxation
12   policies and other states were attempting to reach an agreement
13   with the Direct Marketing Association in order to collect use
14   taxes on out-of-state purchases located in the states signing
15   the agreement; and
16   
17        WHEREAS, working groups in several states have produced
18   reports on electronic commerce and sales taxes, including
19   California, Michigan, Minnesota, and Texas, which suggest
20   options for changing the sales and use tax system; now,
21   therefore,
22   
23        BE IT RESOLVED by the Senate of the Twentieth Legislature
24   of the State of Hawaii, Regular Session of 2000, the House of
25   Representatives concurring, that the Department of Taxation and
26   the Department of Business, Economic Development, and Tourism
27   are requested to study the issues and implications of
28   instituting a tax on electronic commerce; and
29   
30        BE IT FURTHER RESOLVED that the study shall include a
31   review of the options being considered by other states, as well
32   as any actions that may be proposed by Congress in regards to
33   the moratorium on electronic commerce taxation and any other
34   legislation that may be under discussion with regards to
35   taxation of electronic commerce; and
36   
37        BE IT FURTHER RESOLVED that the Department of Taxation and
38   the Department of Business, Economic Development, and Tourism
39   report to the Legislature on their findings and recommendations
40   twenty days prior to the convening of the Regular Session of
41   2001; and
42   

 
 
 
 
 
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 1        BE IT FURTHER RESOLVED that certified copies of this
 2   Concurrent Resolution be transmitted to the Director of
 3   Taxation and the Director of Business, Economic Development,
 4   and Tourism.
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 8                         OFFERED BY:  ____________________________